The Government issued a consultation paper in 2001 entitled 'Routes to Resolution: Improving Dispute Resolution in Britain'. It noted that claims to tribunals have trebled since 1990 and set out the Government's proposals to address the growing pressure on tribunals and the expense for employers this has caused.
The proposals were aimed at encouraging the parties to resolve disputes by internal procedures, facilitating conciliation and adding to the costs regime. These changes, enacted as part of the Employment Act 2002, are likely to be brought into effect during 2003. The question is, will they work?
Prior to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001, the longstanding provisions for costs awards had rarely been used. However, following those regulations, tribunals increasingly made costs awards where the parties' behaviour was unreasonable or misconceived.
Some of those parties, however, may escape a costs order in future. One amendment had been introduced to overturn the Court of Appeal's decision in Kovacs v Queen Mary & Westfield College (2002): that ability to pay was not a factor to consider when deciding on a costs order, on the basis that it could cause hardship to impecunious parties.
Nevertheless, overall the number of costs orders should increase due to certain new powers that have been introduced. In particular, the act provided for tribunals to be empowered to make a wasted costs order and awards in respect of time spent preparing a party's case.
While it is inevitable that the prospect of a costs award or a wasted costs order will deter some parties, these changes on their own are unlikely to make any major impact on the number or length of tribunals.
The new dispute resolution procedures may make a significant impact. A number of cases still come before tribunals in which the parties have made no effort to follow any procedure whatsoever. In future, employers must have a contractual disciplinary and grievance procedure that meets statutory criteria.
Most employment contracts currently state that the disciplinary procedures are non-contractual in order to avoid the risk of claims for compensation if the procedures are not followed. Under the act, the incentive for employers to comply with these procedures will be both the risk of contract claims and the tribunals' new powers. These include the power to vary compensatory awards by up to 50 per cent where the employer or applicant has failed to use those procedures, or to defer certain categories of complaint being presented until those procedures have been completed.
However, the increase or reduction need only be 10 per cent and there should be no double recovery of damages. As the median award for unfair dismissal recited in the consultation paper was £2,744 for 2000-01, a 10 per cent change would put only £275 at stake. That may not be sufficient to put the parties off their day in court.
The Secretary of State is due to issue detailed regulations on these procedures later this year. It remains to be seen what guidance the tribunals will be given on how and when to make these adjustments. The order in which adjustments are made has led to several significant cases in the past and can have a significant impact on the final award. Perhaps the reason why no timetable has been set for their implementation is because the finer points are proving complex.
It is less easy to predict what effect the new arrangements for conciliation may have. There is a problem with both the number and timing of settlements. The late timing of settlements causes great problems for listing. Anything that could bring settlements forward in time would be welcomed by the tribunals.
Under the new legislation, tribunals will be able to postpone the fixing, time and place of the hearing to make an opportunity for the proceedings to be settled by way of conciliation. The objective is that during that period, the Advisory, Conciliation and Arbitration Service (Acas) will have a duty to conciliate but thereafter only a power. To concentrate the minds of the parties, there is provision for a notification to be sent to the parties to tell them that, after the consultation period, the services of Acas may no longer be available.
While the Commercial Court may have the power to send the parties off to mediate, it is often only the immediate prospect of attending a tribunal that encourages settlement. Employment practitioners are all too familiar with the senior manager who is determined to fight a case until a few days beforehand. At that point, it becomes clear that the business demands their commitment, and the prospect of giving evidence, an experience that they may never have encountered previously, is very unappealing.
So will this new legislation work? The Government estimates that there will be financial savings and believes the contractual changes will encourage better relations between employers and employees. It remains to be seen whether this is the case.
An increasing number of cases are for discrimination and those are usually longer and more complex than unfair dismissal claims. The new proposals may mean fewer unfair dismissal cases, but the trend towards longer and more complicated cases is likely to remain.
Nicola Walker is a partner at Hogan & Hartson and a part-time employment tribunal chair